Star Entertainment Group Limited · ASX:SGR
Star Entertainment — Echo Entertainment Group — H1 2012 Earnings Presentation
36 slides from Star Entertainment's earnings presentation, Feb 24, 2012
Slide 1: Half Year Results Presentation (ASX announcement)
24 February 2012 HALF YEAR RESULTS PRESENTATION Attached is the presentation regarding the financial results of Echo Entertainment Group Limited (Echo Entertainment) for the half year ended 31 December 2011. The presentation will be webcast from 10:00am (Sydney time) today, on Echo Entertainment’s w
Slide 2: Echo Entertainment 1H12 Half Year Results Presentation
Echo Entertainment 1H12 Half Year Results Presentation 24th February 2012 1
Slide 3: Basis of preparation and non-IFRS information
Basis of preparation and non-IFRS information □ Information in this presentation is provided as at the date of the presentation unless specified otherwise. It should be read in conjunction with Echo Entertainment Group’s financial report for the half year ended 31 December 2011 and other disclosures
Slide 4: Agenda
Agenda 1. Overview Larry Mullin, CEO 2. Financials Matt Bekier, CFO 3. Q&As Larry Mullin, CEO 3
Slide 5: 1H12 results overview
1H12 results overview □ NPAT of $70.2m not comparable to pcp given demerger. Interim dividend per share of 4.0c declared □ 1H12 a “half of transition” as The Star transformation gathers momentum towards completion later in the year on budget and within timetable □ Pleasing growth at The Star with re
Slide 6: Key drivers of 1H12 result
Key drivers of 1H12 result EBITDA ($m) 350 28.4 / 8.6% 67.1/ 32.4% 100.0 / 22.2% 300 21.0 / 10.7% 250 12.2 / 6.9% 11.1 / >100% 216.8 28.6 199.8 200 188.2 150 100 50 - 1H11 EBITDA* Star Revenue QLD Revenue Gaming taxes, Star Opex QLD Opex IRB Bad Debt 1H12 EBITDA* Pre-Opening 1H12 EBITDA inc Growth G
Slide 7: The Star – Successive openings in 2012
The Star – Successive openings in 2012 Non-gaming Gaming □ Significant new product opened over the course of 2Q12 □ Key mass market visitation drivers still to come FY12 July August September October November December 2H12 FY13 Vestibule Gaming Area 5A Pirrama Rd Entry Sokyo Retail Phase 3 Pyrmont S
Slide 8: The Star – Opened 15 Sept – Entrance and Cherry
The Star – Opened 15 Sept – Entrance and Cherry 7
Slide 9: The Star – Opened 15 Sept – Balla & Black
The Star – Opened 15 Sept – Balla & Black 8
Slide 10: The Star – Opened 15 Sept – Retail & Café Court
The Star – Opened 15 Sept – Retail & Café Court 9
Slide 11: The Star - Opened 25 Oct – The Darling
The Star - Opened 25 Oct – The Darling 10
Slide 12: The Star - Opened 25 Oct – Restaurants and Spa
The Star - Opened 25 Oct – Restaurants and Spa Momofuku Seiobo Sokyo Spa relaxation area Spa reception 11
Slide 13: The Star - Opened January 2012 – VIP salons
The Star - Opened January 2012 – VIP salons 12
Slide 14: The Star – Positive response to openings
The Star – Positive response to openings 13
Slide 15: IRB continues strong growth in 1H12
IRB continues strong growth in 1H12 □ IRB business continues strong momentum with gross revenue up 134.8% to $183.3m (normalised gross revenue up 92.2% to $184.1m). □ Win rate solid and above trend at 1.75% - but turns lower at 13.7 times compared to 15.6 times average over the last 5 years □ Bad de
Slide 16: The Star restaurants and bars – Solid initial results
The Star restaurants and bars – Solid initial results □ Initial performance of the new signature restaurants and bars solid with limited cannibalisation evident in existing areas □ Restaurant and bar revenue up 19.9% to $26.8m in 1H12 Restaurant Total - Gross Revenue ($,000) 2012 - Week to Date 1,60
Slide 17: Project Star – Update on progress
Project Star – Update on progress Status Comments □ Project Star capex 85% spent, tracking on time and budget Capex □ Remaining capex now 95% let with majority at fixed price □ 27.2% revenue growth 1H09-1H12 Slots □ Loyalty program significant driver of growth □ Expect continued growth with commissi
Slide 18: Key milestones to realise potential of Echo
Key milestones to realise potential of Echo Milestone Status Make NSW licence competitive 2008 Partially completed Attract experienced casino talent Strong team in place Demerge from TAH Completed June 2011 Manage disruption during expansion Completed – growth sustained during Star construction Comp
Slide 19: Outlook and summary
Outlook and summary □ Project Star on plan and on budget □ Balance sheet solid and geared to deliver growth □ Growth trajectory for Echo in 2H12 to improve despite weak consumer environment □ 2H12 expected to see sustained revenue growth driven by new product and expansions at The Star – although ma
Slide 20: Agenda
Agenda 1. Overview and Strategy Larry Mullin, CEO 2. Financials Matt Bekier, CFO 3. Q&As Larry Mullin, CEO 19
Slide 21: Echo group financials
Echo group financials $ millions 1H 12 1H 11 Growth 1H 12 1H 11 Growth Actual Actual % Norm** Norm** % VIP Turnover 10,443.2 6,173.5 69.2% 11,928.0 6,216.0 91.9% Revenue 908.2 779.8 16.5% 908.9 797.7 14.0% Variable Contribution 633.8 572.4 10.7% 626.2 586.2 6.8% Operating expenditure (417.0) (372.6)
Slide 22: FY12 1H revenue analysis
FY12 1H revenue analysis Percent revenue growth on pcp Observations: The Star 1H12 1Q12 2Q12 □ Consumers remained cautious over EGMs 9.7% 9.6% 9.8% the half MGR (incl MTGMS) 6.6% 4.2% 8.9% □ VIP volumes up strongly with healthy PGR 4.0% (6.5%) 16.9% win rate VIP (Normalised Gross) 99.1% 93.5% 105.1%
Slide 23: Discussion of results – KPIs
Discussion of results – KPIs Key Performance Indicators ACTUAL NORMALISED 1H 12 1H 11 1H 12 1H 11 Revenue % gaming 87% 85% 87% 85% EGM NMR $327 $316 $327 $316 MTGM Average Units 433 314 433 314 MTGM NMR $392 $416 $392 $416 TG Average Tables 473 435 473 435 TG Revenue/Table/Day $5,620 $4,733 $5,629 $
Slide 24: Echo progressing to the next phase
Echo progressing to the next phase □ Significant increase in The Star operating expenses during 1H12, up 30% to $256.3m due to pre opening expenses and deliberate over-servicing to encourage customer intent to return □ The Star now entering operating phase - cost management program to be initiated f
Slide 25: Pre opening expenses in 1H12
Pre opening expenses in 1H12 □ Significant pre opening expenses (POE) in 1H12 associated with the launch of The Star □ Majority of expenses related to: □ Advertising and promotions around two major launch events and the re-branding of The Star □ Employee and other costs of new areas prior to opening
Slide 26: Capital expenditure
Capital expenditure □ 1H12 capex $215m, including $148m for Project Star and $11m for Queensland expansion (Project Icon) □ Project Star capex of $870m around 85% complete with total project scope unchanged □ Concept development and approvals for Icon progressing. A number of approvals received in 1
Slide 27: Echo funding
Echo funding □ Net debt of A$1,107m at 31 December 2011 □ Undrawn bank facilities of $180m at 31 December 2011 and an average debt maturity of 5.2 years □ FY12 net interest expected to be in the range of $90m to $95m □ Planned average dividend payout ratio of 50% of net profit after tax for the full
Slide 28: Balance sheet and dividend
Balance sheet and dividend $m 31-Dec-11 30-Jun-11 Current Assets Cash and cash equivalents 109.9 108.2 □ Net Debt increased to $1,107m* due primarily to: Receivables 135.8 87.6 □ Timing of capex on projects in 1H12 Other 43.0 32.8 Total Current Assets 288.7 228.6 □ Cashflow impact of pre opening cos
Slide 29: Agenda
Agenda 1. Overview and Strategy Larry Mullin, CEO 2. Financials Matt Bekier, CFO 3. Q&As Larry Mullin, CEO 28
Slide 30: Appendix
Appendix The Star and Queensland results – Actual Page 30 The Star and Queensland results – Normalised Page 31 Operating Expenses – The Star Page 32 Expense Growth – Echo Page 33 Gaming Tax – The Star Page 34 29
Slide 31: The Star and Queensland results - Actual
The Star and Queensland results - Actual ACTUAL The Star QLD Total Change on Change on Change on 1H 12 1H 11 1H 12 1H 11 1H 12 1H 11 $m pcp pcp pcp EGM 125.2 114.1 9.7% 144.3 143.9 0.3% 269.5 258.0 4.5% Main gaming floor 165.2 155.0 6.6% 72.8 69.3 5.1% 238.0 224.3 6.1% PGR 64.7 62.2 4.0% 35.8 34.4 4
Slide 32: The Star and Queensland results - Normalised
The Star and Queensland results - Normalised NORMALISED The Star QLD Total Change on Change on Change on 1H 12 1H 11 1H 12 1H 11 1H 12 1H 11 $m pcp pcp pcp EGM 125.2 114.1 9.7% 144.3 143.9 0.3% 269.5 258.0 4.5% Main gaming floor 165.2 155.0 6.6% 72.8 69.3 5.1% 238.0 224.3 6.1% PGR 64.7 62.2 4.0% 35.
Slide 33: Operating expenses – The Star
Operating expenses – The Star 1H expense growth (including pre opening expenses) $m / % change on last year 32
Slide 34: Expense growth – Echo
Expense growth – Echo 1H expense growth (including pre opening expenses) $m / % change on last year within Category 25.0 / >100% 69.3 / 18.4% 11.2 / 6.4% 44.3 / 11.9% 21.0 / >100% 12.1 / 6.5% The Star VIP Queensland Opex Growth Pre-Opening Expense Growth 33
Slide 35: Gaming tax – The Star
Gaming tax – The Star □ The Star gaming tax increased 20% to $111m driven by gaming revenue growth (including VIP) and an increase in the base tax rate on domestic revenues by 1% to 26.5% during FY12 □ FY12 domestic gaming revenue taxed at 26.5% up to an estimated threshold of $653m with a progressi
Slide 36: Disclaimer
Disclaimer □ This presentation is prepared for information purposes only and does not take into consideration any individual investor’s circumstances. Echo Entertainment Group recommends investors make their own assessments and seek independent professional advice before making investment decisions.
Echo Entertainment Group — H1 2012 Earnings Presentation on 6ix